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Electronic copy available at: http://ssrn.com/abstract=2746794
Trento Law and Technology Research Group Research Paper n. 26
Copyright as Monopoly: the Italian Fire under the Ashes
Roberto Caso and Giulia Dore| February/2016
Electronic copy available at: http://ssrn.com/abstract=2746794
ISBN: 978-88-8443-676-4
COPYRIGHT © 2016 ROBERTO CASO AND GIULIA DORE
This paper can be downloaded without charge at:
The Trento Law and Technology Research Group Research Papers Series Index
http://www.lawtech.jus.unitn.it
IRIS:
http://hdl.handle.net/11572/137906
Questo paper © Copyright 2016 di Roberto Caso e Giulia Dore è pubblicato con
Creative Commons Attribution-NonCommercial-NoDerivatives 4.0
International licence.
Further information on this licence at:
http://creativecommons.org/licences/by-nc-nd/4.0/
ABSTRACT
This essay provides an overview of some research that is in its early stages.
The principal purpose of the authors is to understand whether, in a
Continental European legal system such as the Italian one – traditionally
led by a strong historical and normative vision of copyright (or author’s
right) as natural right and nowadays influenced by the EU propertization
trend – it is yet possible to foresee a different approach that is prone to
interpreting the exclusivity of copyright in terms of monopoly.
The latter approach, to some extent, might in fact be more relevant to
restricting copyright protection by limiting the exclusive rights (ius
excludendi alios) while supporting the public interest. Besides, the vision of
“copyright as monopoly” seems in particular to play an overriding role
within the digital context, where property is less apt in terms of the
promotion and sharing of knowledge and, on the contrary, monopolistic
jeopardy is sensibly flourishing.
CONTENTS
1. Introduction - 2. Monopoly or property? - 3. Copyright as monopoly in the
Italian literature - 4. Copyright as monopoly in the digital environment - 5.
Conclusions
KEYWORDS
Intellectual property – Copyright - Comparative Law – Property - Monopoly
About the Authors
Roberto Caso (email: [email protected]) Personal Web Page:
http://www.lawtech.jus.unitn.it/index.php/people/roberto-caso - is Associate
Professor of Private Comparative Law at the University of Trento (Italy) –
Faculty of Law and co-director of LawTech Group. He teaches Private Law
(“Diritto civile”), Comparative Intellectual Property Law, and ICT Law. Roberto
Caso is author of many books and articles about Intellectual Property, Privacy &
Data Protection, and Contract Law. He is President of “Associazione Italiana per
la promozione della Scienza Aperta” [Italian Association for the promotion of
Open Science].
Giulia Dore (email: [email protected] - [email protected] - Personal Web
Page: http://www.lawtech.jus.unitn.it/index.php/people/giulia-dore) holds a
Ph.D. in European and Comparative Legal Studies from the University of Trento
and she is currently a Postdoctoral Research Assistant in Intellectual Property
Law at the School of Law, University of Stirling, Scotland (UK).
Copyright as Monopoly: the Italian Fire under
the Ashes1
Roberto Caso and Giulia Dore
1. Introduction
This essay provides an overview of some research that is in its early
stages. The principal purpose of the authors is to understand
whether, in a Continental European legal system such as the Italian
one – traditionally led by a strong historical and normative vision of
copyright (or author’s right) as natural right and nowadays
influenced by the EU propertization trend – it is yet possible to
foresee a different approach that is prone to interpreting the
exclusivity of copyright in terms of monopoly.
The latter approach, to some extent, might in fact be more relevant
to restricting copyright protection by limiting the exclusive rights
(ius excludendi alios) while supporting the public interest. Besides, the
vision of “copyright as monopoly” seems in particular to play an
overriding role within the digital context, where property is less apt
in terms of the promotion and sharing of knowledge and, on the
contrary, monopolistic jeopardy is sensibly flourishing.
The second paragraph illustrates the typical conflict between the
copyright natural right model and the monopolistic approach to
copyright, with an outlay of the comparative grounds in which it
further develops referring to EU experiences and highlighting the
trend for propertization in the EU. The third paragraph seeks to
demonstrate how the model of copyright as monopoly, which has in
Italy ancient and solid foundations from an economic and legal
theoretical perspective, may represent a fine contemporary
instrument for the present-day challenges of copyright law, with an
irrefutable tie to the methodology of both comparative law and the
economic analysis of law. A de iure condito argument is advocated,
juxtaposing the canons of copyright as natural right and of
1 This working paper was presented and discussed at the Third Annual Private
Law Consortium, July 6-7 2015, Centre for Intellectual Property Policy, McGill
University, Faculty of Law. The authors wish to thank all speakers for their
insightful comments and suggestions. Roberto Caso is author of the paragraphs 1,
3 and 4, Giulia Dore is author of paragraph 2 and 5.
2
copyright as monopoly, but also offering some concrete examples
of the interpretative outcomes and operative effects that each of the
two visions generate. In the fourth paragraph, such considerations
are promptly translated into the digital frame, where the
monopolistic effects of copyright become even more obvious and
pronounced, particularly with reference to the functioning of the
digital exhaustion principle and the use of technological protection
measures. Finally, with these latest concerns in mind, the last
paragraph presents some provisional conclusions.
2. Monopoly or property?
The English copyright and continental authors’ rights systems have
essentially developed around the revolutionary invention of the
printing press, moving on to a legislative path that, departing from
the booksellers’ privileges, led to the first copyright laws in the
1700s. The printing revolution certainly established the foundation
for the subsequent growth of the economics and concepts upon
which public power shaped the law, which still represents the
outcome of a balancing process that embraces opposing and often
conflicting interests.
These interests are, on the one hand, streamlining the individual’s
exclusive rights to exploit his/her intellectual work, and, on the
other hand, the wider interest of the public to access and use the
work. Against this background, the necessary give and take between
such divergent interests is achieved by imposing certain limits over
the duration and scope of copyright. Moreover, exclusive rights also
coexist with the lingering effectiveness of the public domain and so
with a range of exceptions to the main rule of exclusivity.
3
However, the equally revolutionary advance of digital technology,
which has been shaped in the same way as the printing revolution, if
not with sturdier power and consequences, has undeniably
disrupted such a layout of interests, as well as the overall structure
of copyright laws in the Western tradition. Consequently, the public
decision-maker has found him/herself headed for the inescapable
task of reshaping the whole spectrum of interests, which in the first
place requires reconsideration and amendment of the laws thus far
promulgated in order to afford adequate protection to the works of
the mind.
During recent decades, copyright has undeniably undergone
significant expansion [see Lessig, 2004]. The sphere of exclusivity
has attracted new types of work, for example, software and
databases, and new mechanisms of protection have been settled in
order to encompass new ways of exploiting the work, such as the
imposition of levies upon the selling of devices or the incorporation
in the work itself of technological protection measures (TPMs). The
expansion of copyright, however, characterizes a mutual trend for
the Western tradition as a whole, to the extent that many
commentators have discerned some kind of convergence between
common and civil law systems [e.g. Goldstein 2001].
Noticeably the United States seems to have exerted some strain on
the enlargement of copyright, from the international angle, by
means of conventions and through its own national legislation [e.g.
Litman, 2006]. Nevertheless, the European Union has gone even
further, promoting an overall far-reaching protective scope, as in
the case of the sui generis protection of the database. The same EU
legislator makes such intent abundantly clear. For example, the
Directive 2001/29/EC on the harmonization of certain aspects of
4
copyright and related rights in the information society, in fact,
establishes the highest level of protection (see recitals 4 and 9).2
Both from a scholarly and case law standpoint, the picture appears
far more compound. Countless scholars have criticized the
unhindered expansion of copyright. The courts, on the other hand,
have been vacillating, with some pronouncements in favour of
strengthening copyright protection and others preferring a more
definite copyright limitation. Either way, with regard to the
augmentation or contraction of copyright protection, we cannot
discard the role of theoretical models that have explored the nature
and justification of copyright and intellectual property in general.
As commonly understood, two main theories have been devised in
this regard. One leads to the utilitarian model that considers
exclusivity to be the basic instrument created by the State with the
aim of incentivizing knowledge exchange; the other, on the
contrary, hints at the doctrine of natural law, which favours
copyright protection in terms of fair reward for the expenditure of
creative labour. Indeed, although the assortment of theories is
broader and has many leading to few more theoretical models, for
the purpose of this article, we will be considering the two foremost
above-mentioned theories.
In an attempt to simplify these arguments, we will allege that the
former approach is well identified with the word “monopoly”, while
the latter nowadays is rather pigeonholed by the term “property”
[cf. Moyse, 1998; Strowel, 1993, 77 ff.].
Use of the word “property” appears to be undeniably dominant, not
only being used regularly in a general sense or in more focused
discourses on copyright, but also resulting from the explicit
reference to it made by legislators and other decision-makers in
2 See also Dir. 2004/48 on the enforcement of intellectual property rights (recital
21).
5
their lexicon, both on domestic and international grounds, for
example, the World Intellectual Property Organization (WIPO) [e.g.
Lemley, 2005], TRIPs and – at least from a constitutional
perspective – the EU [e.g. Resta, 2011].
At the same time, one should not overlook that copyright law has
its own peculiar features, which distinguish it both from a legal
monopoly and from a right of property over tangible res. However,
the inevitable rhetorical imprint of both terms in question plays an
interesting and crucial role at the ideological, political and
operational levels.
Furthermore, influential scholarly sources emphasize how common
law systems, especially those of the United States, are more prone to
sharing the monopolistic vision, while the Continental structure of
authors’ rights, as found in the Italian system, are largely inclined
towards the natural right image. This is an oversimplification, largely
caused by the dissimilar historical development featuring the
common law copyright and the civil law droit d’auteur [e.g. Izzo,
2010] respectively. Many authors have underlined that both visions
may have coexisted and still exist against the two legal backgrounds,
also explained by the legacy of disseminated ideas and attitudes that
are common to the larger Western tradition [e.g. Goldstein, 2001, 3
ff.; Ginsburg, 1990].
Nonetheless, there is an element of truth even in this
oversimplification. The monopolistic vision explains certain
distinctive features of the normative structure of US copyright law,
while the natural right pattern better describes the typical traits of
Continental legislation, such as the Italian legge d’autore that is
henceforth considered. The twofold claim of the monopoly and
natural right schemes appears confirmed by their polyvalent use by
legal interpreters. The naturalistic, proprietary and individualist
approach serves as a means to justify the expansion of the
6
protection of copyright, but the metaphor of property may also be
well cast to rationalize the limits of copyright [Lametti, 2012]. The
same dual attitude appears to be equally pertinent to the utilitarian
design.
Nonetheless, in the view of the authors, especially with regard to
the economic facets of copyright (for now leaving aside any
consideration for the moral rights of the author), and particularly
within the digital arena, the monopolistic vision appears to be a
more suitable choice to define properly the perimeters of copyright
exclusivity. The exclusive trait (monopoly) is indeed to be regarded
as the instrument that the State creates to grant protection to
copyright, not the intrinsic purpose of the law itself, which is
instead the advancement of the learning and sharing of knowledge.
Within this defined context, the core parameter for reference shall
be the public domain [cf. Patterson, 1998, 443 ff.], while the
monopoly of the exclusivity alias shall be the exception.
As anticipated, this is a known perspective in the United States. The
historical roots of the utilitarian view have been vastly explored and
continue to be investigated. For the purposes of this paper, we will
not review these arguments. The foremost aim of the present
research is indeed to show how, even in a typical Continental
system such as the Italian one, despite the normative framework
that seems to be going in the opposite direction (see Article 17,
paragraph 2 of the Charter of Fundamental Rights of the European
Union), the monopolistic theory of copyright is likely to make a
significant contribution to the debate.
Particularly in the digital era, the overriding power that arises from
granting the exclusivity of rights may sensibly challenge the fragile
equilibrium that legislators and courts have been trying to establish
in balancing the opposing interests of all copyright players and
7
stakeholders. This appears even more plausible when such power is
exercised with the strength and even armed force of technology.
Moreover, even before the massive spread of digital technologies,
the visualization of copyright as a monopoly has had relevant
effects on the encroachment of innovation. Specifically, the
Betamax decision of 1984 certainly represents a critical juncture
[Samuelson, 2006]. The Court’s conclusions supported the inference
that the manufacturers of devices, such as home video recorders
that consumers use to record copyrighted works, are not liable to
copyright infringement as far as such devices allow licit and
commercially relevant uses that do not violate copyright [J. Band, A.
J. McLaughlin, 1993; M. Burks, 1985; J. Lawrence, B. Timberg,
1989; G. S. Lunney, 2002]. Furthermore, not only is their
contributory (indirect) liability excluded, but users are also
exempted as far as their use is for time shifting, with the fair use
defence applying accordingly.3
Nevertheless, the Betamax vision is not absolute. On other
occasions, the Supreme Court has pronounced differently.4 To
3 In the arguments of Justice Stevens who delivered the opinion of the Court, the
US constitutional IP clause operates as follows: “The monopoly privileges that
Congress may authorize are neither unlimited nor primarily designed to provide a
special private benefit. Rather, the limited grant is a means by which an important
public purpose may be achieved. It is intended to motivate the creative activity of
authors and inventors by the provision of a special reward, and to allow the
public access to the products of their genius after the limited period of exclusive
control has expired.” Sony Corporation of America v. Universal City Studios,
Inc., 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984),
<https://supreme.justia.com/cases/federal/us/464/417/case.html>. 4 See, in particular, the Grokster decision by the Supreme Court, which certainly
challenges the Betamax approach holding that “one who distributes a device with
the object of promoting its use to infringe copyright, as shown by clear
expression or other affirmative steps taken to foster infringement, is liable for the
resulting acts of infringement by third parties”. Metro-Goldwyn-Mayer Studios
Inc. v. Grokster, Ltd. 545 U.S. 913 (2005), 380 F.3d 1154,
<http://www.supremecourt.gov/opinions/04pdf/04-480.pdf>.
8
such an extent, although some traces in the proprietary perception
of copyright can be found in the US system, the monopolistic
canons certainly prevail and have a clear impact on the entire
development of its domestic law, even thanks to the influence
played by economic analysis of the law on copyright theories.
On the contrary, within the framework of the European Union, the
constitutional normative approach is radically different and certainly
influenced by the typically property-driven approach of the
Continent. Article 17 paragraph 2 of the EU Charter of
Fundamental Rights of the European Union, dedicated to the Right
to property, declaims, in the English version, that “intellectual
property shall be protected” [Resta, 2011; Sganga, 2015].
Accordingly, the Court of Justice of the European Union (CJEU) is
creating copious case law on copyright. The emblematic questions
posed by the digital era fuel the problem of balancing copyright
with other fundamental rights such as the freedom of expression
and information, the privacy and protection of personal data, but
also the freedom to conduct business. A good example of this is
provided by the Court’s judgment on the Promusicae case.5 Such
urgings appear even more clear and explicit in the Scarlet decision
and are then reaffirmed by the next CJEU ruling in the Netlog case,6
and more recently in the UPC Telekabel decision [Dore, 2015].7
5 As the ECJ argues in respect to the necessary fair balance among rights, or more
broadly the interests of the different parties involved in copyright questions or
controversies, “it should be recalled that the fundamental right to property, which
includes intellectual property rights such as copyright and the fundamental right
to effective judicial protection constitute general principles of Community law
[However], Member States must, when transposing the directives mentioned
above, take care to rely on an interpretation of the directives which allows a fair
balance to be struck between the various fundamental rights protected by the
Community legal order” (at 62, 63 and 68). Case 275/06 Productores de Música
de España (Promusicae) v Telefonica de Espana SAU [2008] ECR I-271. 6 The Court in that case made it clear that «the protection of the right to
intellectual property is indeed enshrined in Article 17(2) of the Charter of
9
In brief, the constitutional normative context of the European
Union visibly seems to be pushing, at least for what is declared in
legislative acts and court rulings, for the propertization of copyright
[Resta, 2011; Sganga, 2015]. The interpretative understanding of the
EU Court of Justice deliberately speaks of the need to strike a fair
balance among different fundamental rights and, by so doing,
applies general criteria such as proportionality and reasonableness.
Therefore, it is in the offing that there will be a renewal or
reconsideration of the theory of copyright as a monopoly even
within the European Union and its Member States. Indeed, in the
view of the authors, this is more than plausible, at least with regard
to the Italian context.
3. Copyright as monopoly in the Italian literature
The Italian Constitution of 1948 does not mention either copyright
or the other intellectual property rights that include patents or
trademarks. Consequently, copyright and, in turn, the related
principle of striking a fair balance among all interests and rights
applying to copyright matters, are otherwise indirectly referred to as
other existing constitutional provisions.8 The applicable regulatory
Fundamental Rights of the European Union (‘the Charter’). There is, however,
nothing whatsoever in the wording of that provision or in the Court’s case-law to
suggest that that right is inviolable and must for that reason be absolutely
protected» (at 42 and 43). Case C-360/10 Société belge des auteurs, compositeurs
et éditeurs SCRL (SABAM) v. Netlog [2012] ECR I-0000. 7 Case 314/ 12 UPC Telekabel Wien GmbH vs Constatin Film Verleih GmbH
[2014] OJ C151/2. 8 In particular, as the Italian Constitutional Court argued “it has to be observed
that, given the public interest of both users and enterprises in that market, the
interests of the authors of the works in question still matter, which the legislator
considers to be of overriding importance […] it becomes essential to
acknowledge the proprietary right [sic!] of the author of the work and his/her
10
framework is instead devised from the 1942 Italian Civil Code and
in Law No. 633 of April 22, 1941, for the Protection of Copyright
and Neighbouring Rights, subsequently amended but never entirely
and systematically reformed.
In terms of copyright as a scientific discipline in Italy, traditionally
professors of industrial law – a branch of commercial law – have
taught it.9 Indeed, even considering this peculiar affiliation, Italian
copyright literature has proved to be quite productive and wide-
ranging, with equal representation of natural law and utilitarian
approaches to copyright [Auteri, 2012, 541]. Therein, some
influential exponents of the Italian liberal economic theory have
raised their voices against intellectual property, from 1700s
illuminists to 1900s economists. Relatively recent contemporary
works have expressly underlined such an important trend [Borghi,
2003], in particular focusing on the thoughts of leading economist
and politician Luigi Einaudi [Resta, 2011].
consequent exclusive right to exploit the work itself, although the law does not
fail to afford adequate protection to other rights and interests by pursuing a fair
balance among them all. This is a necessary balance that is shielded by the
Constitution’s principles that concern the protection of freedom of art and
science (Article 33), the defence of private property, which extends to intellectual
works (Article 42), and the safeguarding of labour in any form, including
intellectual creation (Article 35). Such a balance appears at the same time to be
pursued through the promotion of artistic, literary and scientific outputs, to foster
the full development of the human person (Article 3) and of culture (Article 9)”.
Judgment No. 108/1995, at 9 and 10 [translation by the authors].
The strong bond between the protection of authors and of culture has been
reaffirmed by the same Italian Constitutional Court on several occasions (see
Italian Constitutional Court, judgments No. 241/1990; No. 361/1998), which as
yet has not failed to take into adequate consideration the freedom to conduct
business (Article 41). 9 Recurrently, the subject of copyright law has been marginal: it may be imparted
as an elective course or simply outlined in other courses. Similarly, the main
textbooks and encyclopaedias are generally left to the experts in industrial law.
11
In a renowned 1940 essay, Einaudi reviewed his nineteenth-century
precursor Francesco Ferrara to share his criticism of the so-called
artistic and literary property [Einaudi, 1940]. Such criticism is indeed
rather sweeping and, like Ferrara, Einaudi doubts the reasonability
of an economic justification of copyright and patents. Hence, he
promoted a drastic revision of the legislation in force, which should
have aimed at reducing the scope and term of exclusivity, allowing
everybody to reproduce and use the literary or artistic work when
exclusivity had ended, by simply paying a fee. It is not by chance
that Einaudi referred several rimes to the word “monopolio”
(monopoly) to qualify the economic substance of intellectual and
industrial property.
Resuming the legal theory after the Second World War, in addition
to the natural law doctrines of copyright that at first prevailed,
distinct discourses based on a utilitarian perspective to intangible
goods and the justification of copyright protection became
increasingly noteworthy. In particular, the utilitarian approach is
well portrayed by the thoughts of a great Italian law scholar, who
also engaged with comparative law, namely Tullio Ascarelli.
In the 1957 edition of his precious book on the theory of
competition and immaterial goods, criticizing the typical approach
of natural law to both copyright and patent, Ascarelli argued that
the ultimate justification of exclusivity had to be located in the
public interest, which is in fact fed by a proper limitation of
exclusivity. Once the term exclusivity has expired, copyright works
and inventions must be freely reproducible and exploitable by
others. Such freedom properly and fully expresses the advancement
of cultural and technical progress [Ascarelli, 1957, 244].10
10 Accordingly, so he discussed: “It seems to me that the justification of absolute
rights towards intellectual creations lies precisely in the interest of promoting
cultural or technical progress or to ensure that the best competitors prevail as the
public consumers reputed most praiseworthy” [translation by the authors].
12
With explicit regard to copyright, Ascarelli adds that the justification
of copyright protection cannot be referred to the protection of
labour, but instead, as it is with intangible goods in general, to the
general interest of promoting cultural progress. In other words,
there seems to be the opportunity to shield the economic protection
of the work (as it would not make sense in terms of moral rights);
on the other hand, it is essential to limit its duration and to confine
it to those intellectual creations that are otherwise acknowledged as
original works of the mind [Ascarelli, 1957, 598].
In contemporary times, Ascarelli’s theory is still somehow thriving,
although with different shades and inferences, especially with regard
to an understanding of exclusivity in an openly functional (yet
utilitarian) view and in strict connection with the theory of
competition. More specifically, nowadays the Italian scholarship
appears quite sensible to theoretical approaches that consider the
relevancy and uniqueness of the public interest [e.g. Ghidini, 2008].
Although with distinct perspectives, several authors criticize the
excessive derivation of copyright protection, thus suggesting de jure
condendo its severe limitations, or even the substitution of its typical
mechanism (the exclusive right) with others, such as the pay-per-use
model [Ricolfi, 2011; Ricolfi, 2014, Libertini, 2014].
Such renewed concerns for the public interest may effectively play
an initially standing role in discussing copyright from a historical,
comparative and explicitly economic standpoint, particularly in
terms of economic analysis of law (hereafter EAL) [Pardolesi,
Granieri, 2004; Colangelo, 2015]. Unmistakably, this favours the
development of a methodology that is at the same time subject to
certain ideological and political interpretations. For instance, the
EAL approach is often identified with the liberal vision that is
typical of the Chicago school, which is recurrently interpreted as
being in favour of a strong intellectual rights protection. However,
13
it is known that there are other specific ideological lines of EAL
that are not exactly ascribable to the above-mentioned model.
In a broader sense, criticism of the unlimited expansion of
copyright, in fact, converges into a distinct slant that contrasts with
legal positivism and formalism, while being inclined to
consideration of a larger number of factors and dynamics –
ideological, political, social and ethical – that move and influence
intellectual property. However, such a modernized and multifaceted
approach to the investigation of intellectual property and copyright
matters still appears not quite ready to be translated into a
demarcated and thorough concept of public interest.
4. Copyright as monopoly in the digital environment
The strong property-driven vision of copyright leads to a number of
important conclusions.
First, either one shares the idea that intellectual property rights
are numerus clausus, thus substantiating in patents, copyright,
trademarks and other sui generis forms of protection that the
exclusivity of the rights there embodied is capable of expanding
within each sphere of protection and consequently extending the
latter to new types of work, namely, software. Therefore, some have
argued that the list of works relating to copyright subject matters is
not absolute but indeed open to going beyond the traditional realm
of literature, music, figurative arts, architecture, theatre and cinema
[Auteri, 2012, 547].
In addition, the dominant interpretative approach to diritto
d’autore, contrarily to the US copyright, furthermore sustains that the
number of entitlements that the right-holder may exercise is wide
open and therefore not limited to the right to reproduce, distribute,
14
perform in public and communicate the copyright work [e.g. Spada,
2012, 31]. According to this interpretation, even before EU
Directive No. 1992/100 – then codified Directive No. 2005/115 –
granted exclusive status to the right of renting and lending the work,
denying the applicability of the exhaustion right principle, such an
entitlement was already envisaged as one of the right-holder’s
privileges.
Finally, whether we consider copyright to be a property right,
exclusivity is the main standard, regardless of which restraint we
may think is applicable. In particular, according to the predominant
construal, exceptions and limitations must be interpreted strictly.
Such a conclusion appears to be confirmed by the current reading
of the three-step test rule of an international and UE law substance.
With these premises in mind, the risk of overprotecting
copyright is real and made even more concrete by the occurrence
that in the digital age copyright is enforced by contract, by means of
proprietary licence, and by technology protection measures, widely
endorsed by international and domestic legislations.
A good example of the consequence of such an interpretative
trend is represented by neutralization of the exhaustion principle
within the digital context [Perzanowski, Schultz, 2010; Spedicato,
2015]. Such neutralization implies the disappearance of secondary
markets, for example, with regard to the online distribution of e-
books through user licence agreements, which are clearly distinct
from traditional sale even by their appearance (when they began
with “this is not a sale, but a license”) [Elkin-Koren, 2011].
Moreover, such a contractual tool disproves resale, endowment and
lending by the licensor. If the content of the licence is enforceable,
the monopolistic effects of copyright become overwhelming, clearly
shaping a serious endangerment of ancillary markets. Consequently,
in the digital dimension it is unlikely to envision the resale of used e-
15
books, or the endowment of certain books to libraries – even
loaning between private individuals. Furthermore, the extension of
monopoly not only has economic effects, but in turn, it echoes over
the right of information – with fewer available low-priced or gratis
books – and over privacy, given that the copyright-holder will
always maintain control of his/her books.
By the way, it is worth noting that when overt implications of
competition law are both marked and perceptible, the ECJ has also
denoted the monopolistic consequences of copyright although
explicitly referring to the word monopoly. We may recall the
UsedSoft case of 2012, which dealt with the exhaustion of the right
of distribution with regard to the selling of digital copies of software
distributed over the Internet.
On this matter, the ECJ in fact explained that “the objective of
the principle of the exhaustion of the right of distribution of works
protected by copyright is, in order to avoid partitioning of markets,
to limit restrictions of the distribution of those works to what is
necessary to safeguard the specific subject-matter of the intellectual
property concerned […] a restriction of the resale of copies of
computer programs downloaded from the internet would go
beyond what is necessary to safeguard the specific subject-matter of
the intellectual property concerned”.
Another good example to explain the broad extension of
monopolistic effects is provided by the application of technology-
protection measures to the devices that allow the content of the
copyright work to be played. In particular, we refer to the instance
in which videogames right-holders often manufacture the device
(console like Sony Playstation) that is required to use them. The
manufacturer makes the device interoperable only with its own
videogames by implementing TMPs to the latter. According to the
manufacturer, TMPs find their validation in copyright law, which
16
also allows their enforcement, by granting manufacturers the power
to sue those who modify the hardware in order to make the device
interoperable. However, the aim of the technology measure is not
to protect videogames from piracy, but rather to extend market
power (from the market of devices to the market of their
corresponding goods) and to compart the market (TMPs can in fact
discriminate prices over distinct markets through regional codes).
The effect is not merely economic, as a postponement of the
market as a whole, but it also affects property over the device,
considered stricto sensu as a property over tangible goods, and
certainly impairs the freedom to modify technology. The liberty to
interact and even modify technology indeed represents an
indisputable and countless source of innovation.
The model of copyright as a monopoly challenges the dominant
Italian interpretative trend. According to this approach, the public
domain is the standard, while exclusivity is the exception, and the
exception must be interpreted restrictively. More specifically, few
distinctive consequences occur. First, only the legislator has the
power to grant new exclusive rights. Without express legislative
acknowledgment, any other privilege that the right-holder may claim
will not be enforced in court. Second, exclusivity is not the only
instrument of protection for the right-holders, since other means of
equal importance are the pay-per-use domain based on a liability
rule, or the automatic imposition of a charge that corresponds to a
percentage of the price of sale of devices that play and record
copyright works. Third, free uses, named exceptions and limitations
in the European Union are subject to analogical interpretation. The
three-step test is a general standard and, like fair use, it should
permit the striking of a fair balance among different interests.
Such an interpretive framework allows the above-illustrated cases
to be solved with regard to digital exhaustion and technological
17
measures that are implemented into videogames and related devices.
Moreover, the principle of exhaustion articulates a general rule of
protecting the public domain, meanwhile condensing the
monopolistic influence of copyright. It applies to the digital context
without an explicit legislative acknowledgment. If the legislator
wanted to exclude such a principle from the digital worlds, he or
she should have said so expressly.
Furthermore, when technical measures are employed to extend
the market power and to compartmentalize the markets, a misuse of
the power to apply TMPs occurs, which has nothing to do with the
protection of copyright works. This is the main reason why the
freedom to modify devices in order to extend and implement their
functionality and interoperability should be allowed and indeed
promoted.
Copyright as a monopoly scheme has historical and economic
underpinning; it develops for want of legislation. It is a legal artefact
that was created relatively recently, with the result of a
transformation from monopoly privileges, granted to some, into a
right of exclusivity that is born to concern all authors of original
works of the mind.
Moving from privileges to exclusive rights, copyright has not lost
its economic substance, namely the fact of being a legal monopoly.
Economists see legal monopoly as one of the instruments used by
public power to regulate the production of knowledge. There are,
however, other tools that target the same need, such as the tutelage,
direct public procurement of information, prizes and rewards, but
also incentives aimed at supporting the making and spreading of
information. Additionally, digital technology has freed creative
energy, with the exception of precise economic inducements.
While economists deliberate over the effective significance of
incentives on the development of copyright, exclusivity
18
unquestionably ontologically contrasts with competition. The
incentivizing effect has to face the inexorable constraint of
competition – a risk that appears greatly augmented when one
considers that information is intrinsically cumulative and
incremental. Major risks also seem to arise where intellectual
property interacts with network externalities and the influence of
standards. Truly, without an extensive public domain there is very
little room for making and sharing knowledge, which is, and should
remain, the core aim of copyright.
5. Conclusions
In This essay is not about finding a way to amend and reform
copyright in order to make it more applicable to the digital context.
There is a vast body of literature on this subject. Rather, the present
work probes the significance of applying the strong traditional
natural right and proprietary visions of copyright and attempts to
suggest a different approach, based on the monopolist insight of
copyright.
On the Continent, particularly in copyright systems, the first model
of copyright as property has had several undesirable effects. The
vision of copyright as a monopoly, instead, may appear a
provocateur when visited upon the Italian system, but it has its
historical and economic foundations within. Furthermore, the same
Court of Justice of the European Union, although remaining
consistent with the idea of property on lexical grounds, also affirms
the crucial principles that copyright must be balanced with other
equally important fundamental rights, such as the freedom to
conduct business, the right of information and of privacy.
19
Such a balance, however, cannot be fully understood and fulfilled
without granting adequate attention to the monopolistic substance
of exclusivity, the latter being the key element of copyright. Only
careful attention to the consequences that monopoly projects on the
public interest for the progress of knowledge may effectively lead to
the fair balance that is so frequently evoked.
30
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